Reverse-Mortgage Rule on Surviving Spouse Tossed by Judge

Reverse-Mortgage Rule on Surviving Spouse Tossed by Judge

ABI Bankruptcy Brief | October 1, 2013
 
  

October 1, 2013

 
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REVERSE-MORTGAGE RULE ON SURVIVING SPOUSE TOSSED BY JUDGE

A rule of the U.S. Department of Housing and Urban Development governing repayments of reverse mortgages by surviving spouses conflicts with federal law, a U.S. District Judge has ruled, Bloomberg News reported yesterday. HUD erred "when it insured the reverse mortgages of plaintiffs' spouses pursuant to regulation, which permitted their loan obligations to come due upon their death regardless of whether their spouses were still alive," U.S. District Judge Ellen Huvelle said yesterday. The widowers who sued HUD cited a federal law that defers an obligation to pay off such loans until the homeowner's death and defines "homeowner" to include the surviving spouse. HUD rules make it more likely that a surviving spouse will end up in foreclosure, according to the suit, which was filed in 2011. The language HUD used when implementing the law states that the loan comes due "if a mortgagor dies and the property is not the principal residence of at least one surviving mortgagor." Read more.

COMMENTARY: OBAMA'S DETROIT BAILOUT

The White House announced on Friday a $320 million aid package for the bankrupt city of Detroit because of "exceptional" circumstances. According to an editorial in today's Wall Street Journal, the action creates a slippery slope, because other struggling cities will also want a financial infusion. The federal funds, which were cobbled together from programs including TARP and the Federal Emergency Management Agency, are supposedly intended to encourage private investment. The aid includes $150 million to remove blight and spur redevelopment; $30 million for public safety and to hire 150 firefighters; and $140 million to improve transportation. The administration is also offering its technical expertise to help overhaul the city's dysfunctional computer systems. Foundations such as Kresge, Ford, Knight and Skillman have already poured more than $70 million this year into initiatives to rebuild Detroit. Kresge alone has committed $35 million for the city's new street-car system and $150 million over five years to implement the Detroit Future City plan to revive downtrodden neighborhoods. Two weeks ago, NCB Capital Impact and Kresge announced a $30.25 million fund to support development along the street-car line. Read the full editorial. (Subscription required.)

CLOCK STARTS ON SEC'S CEO PAY DISCLOSURE RULE

The Securities and Exchange Commission is set to publish a rule requiring companies to disclose how much they pay their top executives, and has started the clock on a two-month comment period for the contentious proposal, The Hill reported yesterday. Unveiled earlier this month, the draft rule is required under the Dodd-Frank Wall Street reform law. The statute calls for regulations forcing companies to reveal the median income of rank-and-file employees and the salaries of chief executives. Firms would also be required to calculate the pay ratio reflecting the difference between the two figures. Proponents of the rule argue it would help shame companies that heap exorbitant salaries on their top officers and give lower-level employees more leverage to negotiate for higher pay. But business groups and banks warn that the cost of complying with the new regulations would be overly burdensome, with some estimates placing the price tag at $100 million for a single multinational firm. To allay those concerns, the draft regulations call for a flexible approach to calculating the figures, with firms able to choose from a series of alternative compliance options. Read more.

Click here to view the draft regulations.

COMMENTARY: TOO BIG TO BAIL APPEARS TO TAKE HOLD FOR BANKS

While there are currently many experts who share the view that taxpayers would have to bail out the world's largest banks if another financial crisis hit, that view may be flawed, at least judging by the behavior of the bond market and the behind-the-scenes work of policymakers, according to an analysis in today's Wall Street Journal. Five years after the painful discovery that some firms were "too big to fail," regulators and banks remain incapable of coping with teetering financial behemoths. Any hope of avoiding a repeat of the messy actions of 2008 rests on two premises: that there is a credible plan to take over a failing financial firm and that market participants understand that losses will fall on them and not taxpayers. In short, according to the commentary, investors have to believe that banks are "too big to bail." On the first point, the Federal Deposit Insurance Corp. believes it has a plan ready to go when the next big bank gets close to failure. The FDIC would take over the bank's holding company while trying to keep alive its operating subsidiaries -- the units that run its branches and its trading and wealth-management operations, etc. This variation on the "bad bank/good bank" split should have the advantage of staving off a potential run on the institution. Shareholders would be wiped out, creditors -- even those holding senior debt -- would sustain losses, and top executives probably would be fired. Read more. (Subscription required.)

NEWEST TITLE IN ABI'S BOOKSTORE EXAMINES ISSUES SURROUNDING STUDENT LOANS AND BANKRUPTCY

ABI's newest publication, Graduating with Debt: Student Loans under the Bankruptcy Code, tackles issues surrounding bankruptcy and student loan debt. Student loan debt in the U.S. exceeds $1.1 trillion -- more than any other type of consumer debt except for mortgage loans -- while new education lending continues at an explosive pace. Profs. Daniel A. Austin of Northeastern University (Boston) and Susan E. Hauser of North Carolina Central University School of Law (Durham, N.C.) authored the book with both borrowers and creditors in mind to introduce readers to the basics of student loan debt, including different types of loans and loan-forgiveness programs, delinquency and default, and administrative and nonjudicial remedies for borrowers having trouble repaying their loans. Graduating with Debt covers Bankruptcy Code provisions governing student loans, relevant case law and judicial precedent in all federal circuits, local practices and policies, partial discharge of student loan debt, and specialized treatment of student loan debt in chapter 13. The soft-cover, 250-page book also includes extensive appendices replete with sample pleading and discovery forms. To receive special ABI member pricing, be sure to log in to the ABI Bookstore when pre-ordering.

TOMORROW! ABI'S UNSECURED TRADE CREDITORS COMMITTEE INVITES YOU TO A DISCUSSION ABOUT CLAIM-TRANSFER TRANSACTIONS

Members are encouraged to join ABI's Unsecured Trade Creditors' Committee in a discussion tomorrow at 4 p.m. ET about considerations that arise out of claim-transfer transactions. Bankruptcy claim transfers are an active part of the bankruptcy process in today's marketplace, and for this reason, the Judicial Conference of the United States imposed a new fee on each transfer, effective May 1, 2013. The moderator for the call, Neil B. Glassman of Bayard, P.A. (Wilmington, Del.), will lead a discussion focusing on the steps in a claim-sale transaction, standard provisions in the transaction documents, developments in the industry, and tricks and traps creditors' counsel can avoid. If you would like to participate on the free committee call, please contact Martha Cannon at [email protected]

THURSDAY! ABILIVE WEBINAR LOOKS AT THE INTERSECTION OF INTELLECTUAL PROPERTY AND BANKRUPTCY: KODAK, NORTEL AND OTHER CASES

IP experts will shed light on the mysteries of understanding IP law and navigating the often puzzling sales processes, drawing from their experiences in Nortel, Kodak and other important cases, in an abiLIVE webinar on Oct. 3 from 1:00-2:15 p.m. ET. Speakers will include David Berten (Global IP Law Group, LLC; Chicago), Pauline K. Morgan (Young Conaway Stargatt & Taylor, LLP; Wilmington, Del.), Cassandra M. Porter (Lowenstein Sandler LLP; Roseland, N.J.), Kelly Beaudin Stapleton (Alvarez & Marsal; New York) and Christopher Burton Wick (Hahn Loeser & Parks LLP; Cleveland). To register, click here.

ABI LAW REVIEW/ST. JOHN'S SYMPOSIUM ON FRIDAY TO EXAMINE HEDGE FUNDS IN BANKRUPTCY- FREE PROGRAM!

ABI Law Review and St. John's School of Law Center for Bankruptcy Studies invite members to attend the Fall 2013 "Hedge Funds in Bankruptcy" Symposium on Oct. 4 The free program will be held at St. John's School of Law in Queens, N.Y., from 9 a.m. to 2:30 p.m. ET. Distinguished scholars and professionals in the hedge fund and bankruptcy fields will discuss the growing role that hedge funds now play in the bankruptcy process and to assess the desirability of maintaining, expanding, limiting, or otherwise changing this role by means of changes in bankruptcy law, policy or practice. While there is no fee to attend the symposium, advance registration is required. To register, please complete and submit the online registration form.

FIRST ABI WORKSHOP PROGRAM LOOKS AT RISKY TIMES FOR SECURED LENDERS AND SERVICERS! ATTEND IN PERSON OR VIA LIVE WEBSTREAM

You will not want to miss the abiWorkshops series' inaugural program, "Risky Times for Secured Lenders and Servicers." The program is cosponsored by TMA (Chesapeake), IWIRC (D.C./Greater Maryland) and RMA (Potomac), and will be held on Nov. 6 from 9 a.m. to 3 p.m. ET in the ABI Headquarters Conference Center in Alexandria, Va. The abiWorkshops series provides attendees two great ways of participating: You can register to attend in person at the ABI Conference Center, or you can participate via a live webstream! Topics that will be covered on the Nov. 6 program include:

- Living with the New CFPB Mortgage Servicing Rules
- Business Lending: Navigating What Lies Ahead
- Business Lending: Recent Legal Developments

For more information or to register for the "Risky Times for Secured Lenders and Servicers" abiWorkshop on Nov. 6, please click here.

ABI GOLF TOUR UNDERWAY; LAST STOP FOR 2013 IS WINTER LEADERSHIP CONFERENCE IN DECEMBER

The 7th and final stop for the 2013 ABI Golf Tour is on Dec. 5 at the Trump National Golf Club, held in conjunction with ABI’s Winter Leadership Conference. Final scoring to win the Great American Cup — sponsored by Great American Group — is based on your top three scores from the seven ABI events. See the Tour page for details and course descriptions. The ABI Golf Tour combines networking with fun competition, as golfers "play their own ball." Including your handicap means everyone has an equal chance to compete for the glory of being crowned ABI's top golfer of 2013! A 22-handicapper won the tour event at July’s Southeast Bankruptcy Workshop. There's no charge to register or participate in the Tour.

ABI IN-DEPTH

NEW CASE SUMMARY ON VOLO: HOPE V. ACORN FINANCIAL INC. (11TH CIR.)

Summarized by Paul Avron of Berger Singerman PA

A chapter 13 trustee who, depsite having actual knowledge that a secured creditor's lien was unperfected as of the date the debtor filed the bankruptcy case, and who affirmatively recommended confirmation of the debtor's chapter 13 plan which treated the creditor as secured, is bound by the order confirming the plan and cannot thereafter bring suit against the creditor to avoid its lien.

There are more than 1,000 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: FORECLOSURE CRISIS UPDATE

The Bankruptcy Blog Exchange is a free ABI service that tracks more than 80 bankruptcy-related blogs. A recent blog post examines the trends and developments that have emerged over the course of the past six years since the foreclosure crisis began.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

Does the bankruptcy court's Section 105 power enable it to surcharge the debtor's exempt property?

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

INSOL INTERNATIONAL

INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 43 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

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  CALENDAR OF EVENTS
 

2013

October
- abiLIVE Webinar: The Intersection of Intellectual Property and Bankruptcy: Kodak, Nortel and Other Cases
     Oct. 3, 2013
- Midwestern Bankruptcy Institute Program and Midwestern Consumer Forum
    Oct. 4, 2013 | Kansas City, Mo.
- Professional Development Program
    Oct. 11, 2013 | New York, N.Y.
- Chicago Consumer Bankruptcy Conference
    Oct. 14, 2013 | Chicago, Ill.
- International Insolvency & Restructuring Symposium
    Oct. 25, 2013 | Berlin, Germany

November
- abiWorkshop: "Risky Times for Secured Lenders and Servicers"
   Nov. 6, 2013 | Alexandria, Va.
- Complex Financial Restructuring Program
   Nov. 7, 2013 | Philadelphia, Pa.
- Corporate Restructuring Competition
   Nov. 7-8, 2013 | Philadelphia, Pa.
- Austin Advanced Consumer Bankruptcy Practice Institute
   Nov. 10-12, 2013 | Austin, Texas

  




- Detroit Consumer Bankruptcy Conference
   Nov. 11, 2013 | Detroit, Mich.
- Delaware Views from the Bench
   Nov. 25, 2013 | Wilmington, Del.

December
- Winter Leadership Conference
    Dec. 5-7, 2013 | Rancho Palos Verdes, Calif.
- ABI/St. John’s Bankruptcy Mediation Training
    Dec. 8-12, 2013 | New York

January
- Western Consumer Bankruptcy Conference
    Jan. 20, 2014 | Las Vegas, Nev.
- Rocky Mountain Bankruptcy Conference
    Jan. 23-24, 2014 | Denver, Colo.


 
 
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